Eric Nuttall called it - energy investors should have a Merry Christmas
Inflation may be here to stay
The “climate change” cult’s war on fossil fuels is going to bite back. Founded solely on political science and devoid of support under the laws of physics, the inane idea that CO2 causes climate change has seen leftist governments in America, Canada, Germany, France and most of Western Europe spout the narrative that the world has to fear catastrophic warming arising from a small increase in atmospheric CO2 levels incapable of causing the apocalypse they claim. In reality, the ability of CO2 to “trap” more outgoing long wave infrared radiation has long since been saturated1 and the dramatic theatre hosted by Justin Trudeau and his activist ministers Steven Guilbeault or the U.S. climate Czar John Kerry are theatre, not science.
Wise to the world’s need for a cheap and reliable source of energy, oil & gas producers have reacted sensibly to the attack by cutting investment and curtailing supply, with Joe Biden’s attempt to lower U.S. gasoline prices by squandering the safety net of the Strategic Reserve by drawing over 180 million barrels simply saw Saudi Arabia and Russia cut output by a similar amount and prices remain firm. Now the inescapable shortage is in high gear and the price of oil (the major contributor to world inflation) is rising again, shown in this chart courtesy of Bloomberg.
Bloomberg estimates the fourth quarter shortage of oil supply will exceed 2 million barrels a day.
If the forecast is correct, that imbalance will manifest itself in higher oil prices, and the costs of diesel, gasoline, home heating fuel, electricity and every energy source that is derived from fossil fuels will move higher and inflation will rise rather than the hope for “soft landing” the talking heads on Bloomberg, MSNBC, BNN and all of the other sell-side hopeful media keep praying for.
Much higher rates will be needed to curb the inflationary spiral and will be effective only if they can compel higher unemployment, a material GDP contraction, and a deeper than mild recession, all of which will cause pain to voters just as America heads into the 2024 Presidential election and the possible Canadian election sure to follow. Two heads should fall - Biden and Trudeau - although Scholz, Sunak, and the labor party leaders of Australia and New Zealand (Hipkins and Albanese) may be on waivers as well. The deeply alarming housing crisis in North America will get worse as higher rates force borrowers who can’t pay out of their homes and banks will eat higher than expected credit losses.
For the fortunate few who never bought into the “climate crisis” nonsense and hold investments in oil & gas producers, this Christmas may have presents. Energy analyst and fund manager Eric Nuttall projected the shortage and his clients will benefit from his courage.
Dieter Schildknecht, Saturation of the infrared absorption of CO2 in the atmosphere, Cornell University, March 27, 2020.
It’s unbelievable the cult and lack of knowledge for the BS going on!
You can certainly add Australia to the list. I think we may have another 10 years for the yarn to unwind. I attended a BMO presentation in Toronto today talking about how great their ETF’s are, the 2 female presenters were talking on how they take very seriously ESG and vote all the shares held. They were bragging, gloating might be more descriptive and repeated it at least twice how they hold managements feet to the fire on Climate Change